The RBI executive director(fintech), Ajay Kumar Choudary said the Reserve Bank of India is in the process of implementing the Central Bank Digital Currency (CBDC) in a phased manner for the wholesale and retail segments, an official said.
The challenges associated with unregulated Digital currency, Finance Minister announced in Union Budget 2022-23 India will develop its own Digital currency.
A Central Bank Digital Currency (CBDC), or national digital currency, is simply the digital form of a country’s fiat currency. Instead of printing paper currency or minting coins, the central bank issues electronic tokens.
Benefits of Central Bank Digital Currency- may reduce printing, transporting and storing paper currency, reduce the burden of inter bank settlement.
As per sources, since such virtual currencies are not regulated by any Centralized authority, it may lead to many challenges – such as Volatility in price, Lack of regulation, Risk of cyber threats, Misuse like- Terror Financing, Drug, Trafficking.
“The challenge for policymakers is to maximise the benefits of fintech while minimising the potential risk,” Choudary said
Know about the Virtual Currency ?
Virtual currency is a type of unregulated digital currency that is only available in electronic form. It is stored and transacted only through designated software, mobile or computer applications. Transactions occur over the internet through secure, dedicated networks. Virtual currency is currency held within the blockchain network that is not controlled by a centralized banking authority like Reserve Bank of India. Some of the examples of Virtual currency such as Bitcoin, Litecoin and XRP.
